The trade war between the USA and China has continued to escalate after the Chinese government confirmed it will impose new tariffs on US$75bn worth of US goods and resume duties on US-made automotive products.

This is seen as retaliation to last week's announcement by the US government of further tariffs on some US$300bn worth of Chinese imports. That was followed by softer sounding tones from US president Donald Trump at the G7 meeting in France at the weekend in which he underlined his admiration for Chinese President Xi Jinping and indicated once again that China "could be ready to do a deal".

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The two sides are scheduled to resume negotiations in Washington in early September, after they failed to reach an agreement during talks in Shanghai in July.

The Chinese State Council said it has decided to impose tariffs of between 5%-10% on US$75bn of US goods in two batches, on 1st September and 15th December, coinciding with scheduled tariff increases by the USA on Chinese goods.

The Chinese government confirmed that tariffs on imported US vehicles and parts, of 25% and 5% respectively, which had been suspended in April will now go into effect on 15th December, resulting in tariffs of 50% on US-made vehicles.

Around 280,000 cars worth some US$13bn were imported into China from the USA last year, according to the China Passenger Car Association, mainly from US carmakers such as GM, Ford and Tesla as well as from Mercedes-Benz and BMW. This was equivalent to around 20% of total car imports into China last year.

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